A verdict in favour of the reclassification is crucial for ArcelorMittal, which is back in the race to control bankrupt Essar Steel Ltd

Prior to 7 February, ArcelorMittal held 29.05% of the share capital in Uttam Galva and was named one of its promoters. Photo: Bloomberg

Mumbai: The Securities Appellate Tribunal (SAT) on Monday adjourned the hearing in a petition filed by minority shareholders of Uttam Galva Steels Ltd challenging the reclassification of ArcelorMittal Netherlands BV as a public shareholder by stock exchanges.

The case will be heard next on 18 June.

A few minority shareholders of Uttam Galva Steels on 28 March had approached the tribunal against the exchanges reclassifying ArcelorMittal as a public shareholder of their company, a change that enabled the world’s largest steelmaker to bid for bankrupt Essar Steel Ltd.

In the petition, the shareholders argued that Uttam Galva did not take shareholders’ approval before applying for the change, and that the stake sale and reclassification was done to make ArcelorMittal eligible to bid for stressed assets.

The SAT had asked the exchanges and the markets regulator to respond to the petition by 23 April.

In an affidavit the markets regulator Sebi said that the reclassification did not require shareholder approval as it was a mere technicality owing to ArcelorMittal selling off its entire stake.

The stock exchanges, too, in their submissions, said that the transfer of shares happened between the promoters, so shareholder approval was not needed.

Since the transfer of shares from Arcelor to Sainath Trading Co. Pvt. Ltd being inter-se transfer between the promoters, it appears, prima facie, that approval from the shareholders as contemplated under regulation 31A(5) would not apply to the present case, the exchanges said.

Similarly, the fact that the two stock exchanges, without waiting for the informal guidance from the markets regulator have approved reclassification separately but not jointly, cannot be a ground to stay the impugned decisions of exchanges, said the exchanges in their submissions.

Prior to 7 February, ArcelorMittal held 29.05% of the share capital in Uttam Galva and was named one of its promoters. On 7 February, ArcelorMittal sold its entire stake to Sainath Trading in an off-market sale.

A verdict in favour of the reclassification is crucial for ArcelorMittal, which is back in the race to control bankrupt Essar Steel Ltd.

In a verdict on 19 April, the Ahmedabad bench of the insolvency court set aside the resolution professional’s decision to disqualify Numetal Mauritius and ArcelorMittal from the first round of bidding.

The two bidders had challenged the resolution professional’s decision to reject their bids.

The resolution professional had disqualified the bids on the grounds that they violated Section 29(A) of the Insolvency and Bankruptcy Code, which bars promoters of defaulting companies from